Obtaining an Employer Identification Number (EIN) from the IRS is a crucial step for businesses operating in the United States. This unique nine-digit number acts like a Social Security number for your business, allowing it to be identified by the Internal Revenue Service for tax purposes. The good news is that applying for and receiving an EIN is absolutely free and can be done directly through the IRS website in just minutes. Avoid third-party websites that charge a fee for this service, as you can always get your EIN for free from the official source.
Who Can Apply for an EIN Online?
The IRS online EIN application tool is designed for entities with their principal place of business located in the U.S. or U.S. territories. You are eligible to use the online tool if you meet the following criteria:
- Location: Your business’s primary location is within the United States or U.S. territories.
- Responsible Party: You are the responsible party who controls the entity, or you are an authorized representative with the authority to apply. A responsible party is generally a person who has a level of control over, or entitlement to, the funds or assets in the entity, or who otherwise directs, controls, or conducts the affairs of the applicant entity.
- Taxpayer Identification Number: You, as the responsible party, possess a valid Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN).
An image depicting a screen capture of the IRS website, highlighting the section for applying for an EIN online, emphasizing the free and immediate nature of the service.
However, there are certain situations where you cannot use the online EIN application:
- Foreign Business Location: If your principal business location is outside of the U.S. or U.S. territories, you will need to apply for an EIN via phone, fax, or mail.
- Government Entities Applying with an Existing EIN: Government entities cannot apply for an EIN using this online tool if they are applying with an existing EIN. This tool is for obtaining a new EIN.
What You Need Before You Apply
Before you begin the online EIN application process, ensure you have the following information readily available:
- Business Legal Name: The official legal name of your business entity.
- Business Address: The principal business address.
- Type of Business Entity: Determine your business structure (e.g., sole proprietorship, partnership, corporation, LLC).
- Reason for Applying: Understand why you need an EIN (e.g., to hire employees, open a business bank account, etc.).
- Responsible Party Information: Details of the responsible party, including name, address, and SSN or ITIN.
Step-by-Step Guide to Get an EIN Online
Getting your EIN online is a straightforward process. Here’s how to do it:
- Access the IRS EIN Online Tool: Go to the official IRS website and navigate to the EIN application page. Look for the “Apply Online Now” button to start.
- Begin Application: Once you start, you must complete the application in a single session. The tool does not allow you to save progress and resume later.
- Complete the Form: Fill out the online application form accurately. You will be asked questions about your business structure, the reason for applying, and information about the responsible party.
- Submit Application: After completing all required fields, review your information carefully and submit the application electronically.
- Receive EIN Confirmation: If your application is approved, you will receive your EIN immediately online. It is crucial to print your EIN confirmation letter (Form CP 575) and keep it for your records.
A document icon representing the Form CP 575, the official IRS form confirming the issuance of an Employer Identification Number (EIN), emphasizing the importance of saving this document.
Important Considerations:
- Session Time Limit: The online tool has a 15-minute inactivity timeout. If you are inactive for 15 minutes, your session will expire, and you’ll have to restart the application.
- Application Limit: You are limited to one EIN application per responsible party per day using the online tool.
- Forming a Legal Entity: If you are forming a legal entity like an LLC, partnership, or corporation, it is generally recommended to form your entity with your state first before applying for an EIN. Applying for an EIN before state formation might lead to delays in processing your application.
When is an EIN Required?
Businesses and organizations typically need an EIN for various reasons, including:
- Hiring Employees: If you plan to hire employees, an EIN is mandatory for payroll and tax purposes.
- Operating as a Corporation or Partnership: Corporations and partnerships, by their legal structure, require an EIN.
- Paying Business Taxes: For paying sales tax, excise taxes, and other business-related taxes.
- Business Structure or Ownership Changes: When your business undergoes significant changes, such as changing its structure or ownership.
- Administering Trusts, Retirement Plans, or Estates: Certain trusts, retirement plans, and estates require an EIN for tax administration.
Once you obtain your EIN, you will be obligated to file necessary tax returns or information returns as required by the IRS.
Other Application Methods
If you are unable to apply online due to eligibility restrictions or preference, the IRS provides alternative methods to obtain an EIN:
- Phone, Fax, or Mail: For businesses with their principal place of business outside the U.S., or for other reasons, you can apply for an EIN by phone, fax, or mail. Refer to the IRS website for detailed instructions and contact information for these methods.
Beneficial Ownership Information Reporting
It’s also important to be aware of Beneficial Ownership Information (BOI) reporting requirements. Certain corporations, LLCs, and other entities may need to report information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). Check the FinCEN website to determine if your business is required to report beneficial ownership information.
Obtaining an EIN is a fundamental step for business operations. By using the IRS online tool, you can quickly and easily get your EIN and fulfill your federal tax obligations. Remember to always use official IRS resources and avoid paying for a service that is inherently free.
